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BMI: Worldwide Pharmaceutical Sales To Exceed US$1,000bn Within Five Years

10-14-2010 04:04 PM CET | Health & Medicine

Press release from: dynamic technologies Gmbh, Köln, Germany

Patent Cliff To Erode Growth

Patent Cliff To Erode Growth

BMI View: The value of the global pharmaceutical market is forecast to increase from US$885bn in 2009 to US$911bn in 2010, equating to a year-on-year (y-o-y) growth rate of 2.90%. Although this figure is in line with the 2.89% recorded in 2008/09, it is significantly down from 2007/08 (+7.97%), 2006/07 (+9.54%) and 2005/06 (+7.29%). Our growth figure for 2010/11 (+2.38%) is far below that projected by primary market research firm IMS Health, primarily due to BMI's below-consensus macroeconomic forecasts. We also expect the 2011-13 patent cliff to be more severe than generally expected.

IMS Health expects the value of the global pharmaceutical market to increase by 4-5% in 2010 and 5-7% in 2011. Although the company acknowledges the effects of patent expiries and payer mechanisms to limit drug spending, it suggests the rebound in 2011 will be driven by rapid expansion in emerging markets and new product launches.

The IMS Health forecast covers all types of pharmaceuticals and takes into account macroeconomic conditions, changing levels of patient access, the availability of drug treatment options and pricing factors. Pricing is evaluated at the ex-manufacturer level, but excludes off-invoice discounts and rebates that are part of prevailing practices in certain major markets. Growth rates are expressed in constant dollars to avoid the impact of currency exchange rate fluctuations.

Similar Forecasting Approaches, Different Outcomes

BMI's Pharmaceutical Expenditure Forecast Model uses four years of weighted historic data that has been collected from regulatory agencies, pharmaceutical trade associations, company press releases and annual reports, subscription information providers, local news sources and information from market research firms that is in the public domain.

Data is then validated by BMI's pharmaceutical and healthcare analysts using a composite approach, which scores data sources by reliability in order to ensure its accuracy and consistency. The model is subsequently integrated with five macroeconomic and demographic variables that have been demonstrated, through regression analysis, to have the greatest influence on the pharmaceutical market. These have been forecast by BMI's Country Risk team using an in-house econometric model.

Finally, the burden of disease on each country is taken into account. This is forecasted in disability-adjusted life years (DALYs) using BMI's Burden of Disease Database (BoDD), which is based on the World Health Organization (WHO)'s burden of disease projections and incorporates World Bank and International Monetary Fund (IMF) data.

Output is amended by BMI's pharmaceuticals and healthcare analysts to take into account key events that have affected a country's pharmaceutical market in the recent past or that are expected to impact the pharmaceutical market over the next ten years. BMI's Pharmaceutical Expenditure Forecast Model covers 134 markets and is updated every quarter.

Optimistic Versus Realistic?

IMS Health forecasts the leading 17 emerging markets[1] growing by 15-17% in 2011 to US$170-180bn. Meanwhile, BMI's Pharmaceutical Expenditure Forecast Model expects these countries to post growth of 14% in 2011, to US$195bn. Both providers of market intelligence agree that emerging markets will drive industry growth.

However, BMI believes that IMS Health's outlook for China is too optimistic. The Connecticut-based firm believes that the world's third largest pharmaceutical market will post growth of 25-27% in 2011. BMI's equivalent figure is 15%. We expect a significant slowdown in economic growth in 2011, with net exports and investment spending the main drags.

IMS Health expects 5-7% growth in Japan, while BMI is projecting just 3.5%. The five major Western European markets (Germany, France, Italy, Spain and the UK) will expand by 1-3%, according to IMS Health. However, due to government austerity measures, BMI believes that a contraction of 1.8% will take place.

Perhaps of greatest interest to multinational drugmakers are the respective near-term outlooks for the US, which is the world's largest pharmaceutical market by some distance. IMS Health is forecasting 3-5% growth in 2011, while BMI expects a more modest 2.1% increase in medicine sales.

The Post-Patent Cliff Outlook

BMI expects the global pharmaceutical market to return to moderate-to-high single-digit growth after the patent cliff. Key drivers include the growing availability and use of high-value biologics, the advent of personalised medicine and a rapid increase in the prevalence of chronic diseases in developed and emerging markets.

[1] Argentina, Brazil, China, Egypt, India, Indonesia, Mexico, Pakistan, Poland, Romania, Russia, South Africa, Thailand, Turkey, Ukraine, Venezuela and Vietnam.

BMI's Pharmaceuticals & Healthcare reports provide unparalleled analysis and forecasts of market expenditure covering all therapeutic areas, disease prevalence, regulatory and reimbursement policies, and company-by-company activity globally. They cover key developments within the following areas: generic drugs, over-the-counter (OTC) medicines, patented drugs, research and development, regulations, biotechnology, medical devices, pricing and reimbursement, imports and exports, supply chain, and epidemiology. BMI’s analysts constantly revise and update almost 80 reports and maintain industry forecasts for virtually the entire global pharmaceuticals market.

Business Monitor International: Pharmaceutical Reports:

Business Monitor International: Further Market Data and Reports:, founded in 2002 has emerged as a leading online portal for market surveys and market research in German speaking areas. Four years later the English language portal was introduced due to the extraordinary success of the portal. Again one year later - the Spanish spoken portal - was founded. The objective of the three portals is to competently and efficiently support consultants and decision makers in management, sales and marketing in the search for worldwide market research. Prospective buyers can look into more than 60,000 market surveys from more than 200 international publishers, current market data for more than 6,000 branches worldwide, 10,000 company profiles as well as a free-of-charge research and recommendation service for individual market research.
c/o dynamic technologies GmbH
Siegburger Str. 233
50679 Köln

Manuel Bravo Sanchez (CEO)
Tel ++49 (0)221 677 897 32
Fax ++49 (0)221 677 897 34

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